Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Tyro Payments (ASX:TYR) share price rockets on first-half results

Australia’s 5th largest merchant bank after the Big Four, Tyro Payments Ltd (ASX: TYR) has announced its first-half results.

As of midday, the Tyro share price had risen 12.5% to $3.06. Here are the key points from the results.

Record transaction volume reduces loss 

Tyro processed $12.1 billion in transactions for the half, a 9.5% increase from the prior corresponding period (pcp). This was largely due to a 13.2% increase in merchants and a 16% increase in point-of-sale (POS) terminals over the period.

Of the three key payment verticals, retail performed the strongest, recording a 17% uplift in transaction value. Ongoing lockdown disruptions hampered growth in hospitality, which grew 6%. Reductions in elective medical procedures impacted the health vertical, which registered a marginal 0.5% decrease in transaction value.

Newer initiatives telehealth and e-commerce delivered strong transaction volume growth albeit off low bases, increasing 86% and 376%, respectively.

Tyro’s banking operations were materially reduced, as the company moved from automated to manual credit assessments to reduce credit risk given COVID-19 uncertainty. This reduced loan originations by 93% to $2.6 million.

While transaction volume increased overall, payments revenue fell 5.2% to $107.7 million, primarily due to a change in card mix. International credit cards, which earn a higher merchant service fee (MSF) fell to 0.7% from 4.4% due to the absence of international travel. As a result, the proportion of lower MSF debit cards increased to 61.5% from 56.5% of transaction volume.

Despite payment revenue falling, gross profit increased 15.9% to $61.2 million and gross margin increased 9.2 points to 50.4% resulting from lower scheme and interchange fees relating to debit cards.

Essentially, despite earning less revenue from a debit card, these transactions are more profitable for Tyro relative to international cards.

The business recorded an EBITDA of $8.5 million, up from $1.5 million a year ago. Net loss after tax shrunk to $3.4 million from $19.2 million, demonstrating more gross profit is dropping to the bottom line.

Terminal connectivity issue update 

To rectify the terminal issue which impacted 30% of merchants in January, Tyro will provide all merchants with a dongle solution in combination with standard terminals to safeguard against future unforeseen outages – an industry-first initiative.

The business has not seen any material uptick in churn rates post the event and transaction volumes were growing between 14% and 18% prior to the recent Victorian lockdown.

My take

Despite the potential for a mass exodus following the terminal connectivity issue, management seems to have kept the damage to a minimum in the short-term. Nonetheless, the true impact will be revealed in the full-year results.

Transaction volume growth is ticking along nicely. Moreover, the net loss has materially shrunk. While management did not provide guidance, I’d be keeping a keen eye on signs of profitability as this will be a critical inflection point for Tyro.

If you are interested in other ASX growth share ideas, I suggest getting a Rask account and accessing our full stock reports. Click this link to join for free!

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Lachlan does not have a financial or commercial interest in any of the companies or funds mentioned.
Skip to content